Seoul to roll out $3.1 bn aid funds for battered auto parts makers

Eco-friendly hydrogen bus in Seoul. [Photo by Lee Chung-woo]

The South Korean government will provide financial assistance worth 3.5 trillion won ($3.1 billion) to struggling auto parts makers and sharply raise subsidies for eco-friendly cars in its latest measure to reinvigorate the auto parts industry.

According to the Ministry of Trade, Industry and Energy on Tuesday, the administration would create a joint 1-trillion-won fund with local governments and automakers to back the investment and long-term operations of auto parts manufacturers. The fresh capital is a follow-up to the 1-trillion-won financial guarantee program last month.

The government also announced it would extend by another year 1.2 trillion won worth of state loans and bank guarantee for suppliers of GM Korea, which shut down its plant in Gunsan earlier this year. Another 63 billion won of the same benefits would be offered to auto parts makers in other ailing cities.

To accelerate the shift to low-emission vehicles, the government has upped the percentage target of green cars against total vehicle output from the current 1.5 percent to 10 percent by 2022.

To this end, it will broaden government subsidies to 42,000 electric cars and 4,000 hydrogen fuel cell cars. It also raised its cumulative sales target of EVs to 430,000 from 35,000 units and fuel cells to 65,000 from 15,000 units by 2022. Export targets for EVs have jumped seven-fold to 250,000 units and fuel cells 17-fold to 5,000 units over the same period.

All new fleets purchased for public use would need to go green by the same year. The government plans to deploy 2,000 fuel cell buses over the next four years and start the test-run of 10 fuel cell taxis in Seoul next year.

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